The U.S. private-sector labor force is expected to add jobs in manufacturing in March 2011 compared with March 2010, but hiring is expected to ebb in the service sector for the same time frame compared with March 2010, according to the Society for Human Resource Management’s (SHRM)
Leading Indicators of National Employment (LINE) survey for March 2011.
Two other reports, by payroll processor ADP and outplacement consulting firm Challenger, Gray & Christmas, also show that private-sector payrolls expanded in February 2011. But layoffs were up for the month as well.
Private-sector employers added 217,000 jobs in February 2011, which is an increase over the 189,000 jobs added in January 2011, according to a report by ADP released March 2, 2011. However, the number of planned job cuts announced by U.S.-based companies increased for the second consecutive month in February 2011, rising to 50,702—the highest total since March 2010, Challenger reported.
“It is too soon to say whether the increases in January and now February [2011] represent a trend,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement about the report. “Certainly the specter of rising gas prices could impact employers’ staffing decisions over the next six months. At the very least, rising energy costs could force employers to postpone hiring plans. At worst, increased costs could kill the fragile recovery and spur another round of layoffs.”
The LINE Employment Report, which is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies, examines four key areas: employers’ hiring expectations, job vacancies, new-hire compensation and recruiting difficulty of top-level talent.
|
Employment Expectations |
Manufacturing |
Service |
|
In March 2011, hiring expectations are up on an annual basis in the manufacturing sector but down in the service sector. |
+12.0
|
-11.5 |
|
Recruiting Difficulty |
|
|
|
In February 2011, the index for recruiting difficulty rose sharply in manufacturing and services compared with a year earlier.
|
+11.6
|
+21.7 |
|
New-Hire Compensation |
|
|
|
The rate of increase for new-hire compensation in February 2011 rose on an annual basis in manufacturing and services. |
+5.0
|
+4.9 |
Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line.
Employment Expectations
The LINE manufacturing hiring index will improve in March 2011 on a year-over-year basis by a net of 12.0 points (a net of 45.7 percent of companies will hire in March 2011, compared with a net of 33.7 percent that added jobs in March 2010). Service-sector hiring, however, is expected to decrease in March 2011 by a net of 11.5 points (a net of 35.0 percent will add jobs in March, compared with a net of 46.5 percent that added jobs in March 2010).
A net total of 15.5 percent of manufacturing-sector respondents reported increases in exempt vacancies in February 2011. This represents a 4.0-point decrease from February 2010. In the service sector, a net total of 8.7 percent of respondents reported increases in exempt vacancies in February 2011, or a 0.1-point increase from February 2010.
The relatively small annual change in the two sectors might be an indicator of payroll stabilization for high-level, salaried jobs as the economy improves slowly, according to Jennifer Schramm, GPHR, manager of SHRM workplace trends and forecasting. However, the number of companies reporting increases in exempt vacancies in the two sectors for the month of February 2011 was still close to four-year highs reached in 2010.
The hiring outlook for manufacturing and service-sector hourly positions appears flip-flopped from exempt vacancies, however. A net total of 18.3 percent of manufacturing respondents reported that nonexempt vacancies barely changed from a year earlier (0.4-point decrease) in February 2011. Hiring leveled off in manufacturing in the second half of 2010, according to data from LINE as well as the U.S. Bureau of Labor Statistics (BLS), but it has begun to increase once again in early 2011. Manufacturing employment grew by 49,000 jobs on a monthly basis in January 2011, according to the BLS.
For nonexempt service positions, a net total of 13.8 percent of respondents reported increased vacancies in February 2011, marking a gain of 6.5 points from February 2010. The rise in vacancies might be driven partially by hiring in professional and business services, which ended 2010 with nearly 200,000 more job openings than the end of 2009, according to the BLS.
“This month’s findings are unusual,” said Schramm. “Compared to the same time last year, [LINE’s] manufacturing sector employment expectations index continued to improve, while hiring expectations for the service sector declined for the first time in many months. We’ll have to continue to watch this to see if it is the beginning of some kind of slowdown.”
The mixed results for March 2011 reflect a labor market that is still struggling to create a volume of new jobs that would reduce the high unemployment rate. Nonetheless, the 53.1 percent of responding manufacturing companies with hiring plans in March 2011 is at a four-year high, and the layoff rate (7.4 percent) is at a four-year low. The 39.2 percent of responding services companies that plan to hire in March 2011 is far below the four-year high reached in 2010, but the layoff rate (4.2 percent) also is at a four-year low.
Layoffs Hit Government, Nonprofits Hardest
Challenger reported that the largest portion of layoffs in February 2011 came from government and nonprofit employers, which announced 16,380 job cuts—up 154 percent from January 2011 and 196 percent higher than February 2010. While most of the cuts occurred at the state and local level, the U.S. Postal Service announced that it has reduced its headcount by 5,600 in recent months.
“More job cuts at the federal level are expected in the months ahead as pressure mounts to cut costs and rein in the soaring national deficit,” said Challenger. “Of course, while most would argue that the deficit must be addressed, it must be acknowledged that sending tens of thousands of government workers to the unemployment line and possibly furloughing thousands more will have negative consequences for the economy in the form of reduced consumer spending and increased outlays for jobless benefits.”
Retail might already be anticipating such a slowdown in consumer spending. Planned job cuts in the sector increased 44 percent in February 2011, following a 17 percent increase in layoffs in January 2011, Challenger reported.
New-Hire Compensation, Recruiting Difficulty
The continuing high rate of unemployment and a large pool of job seekers in the market have given many companies the option of holding down the wages and benefits they are offering to new hires in the effort to control costs. Still, compensation packages for new hires increased slightly on an annual basis in both sectors for the fifth straight month in February 2011, LINE data show.
In the manufacturing sector, a net total of 6.2 percent of respondents reported increasing new-hire compensation in February 2011—an increase of 5.0 points from February 2010. In the service sector, a net total of 5.1 percent of companies increased new-hire compensation in February 2011, which represents a 4.9-point increase from February 2010.
The low rates of change in the two sectors indicate that most organizations are keeping new-hire compensation rates flat and that many people landing new jobs are accepting low wages and benefits as the labor market remains weak, noted Schramm.
However, LINE data indicate that recruiting difficulty is increasing for companies seeking to hire top talent for key positions. LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies.
Even though only a small percentage of respondents reported having a tougher time finding top talent, the level of difficulty increased for February 2011 compared with February 2010. In the manufacturing sector, a net of 11.6 percent of respondents had more difficulty with recruiting in February 2011. This is a moderate net increase of 11.6 points from February 2010, when an equal rate of HR professionals (8.6 percent) reported increasing and decreasing recruiting difficulty.
In the service sector, a net of 4.0 percent of HR professionals reported having more difficulty recruiting in February 2011. This is a sizable increase of 21.7 points from February 2010, when a net total of 17.7 percent of HR professionals had less difficulty finding top talent. Considering that millions of people cannot obtain employment in their industries, the rise in recruiting difficulty in both sectors might be attributed to new or enhanced skill requirements for newly created, high-level jobs in manufacturing and services, Schramm said.
“The ongoing rise in the recruiting difficulty and new-hire compensation points to more favorable conditions for job seekers possessing in-demand skills,” said Schramm. “However, the drop in hiring expectations for the private service-sector suggests that the labor market continues to experience areas of weakness.”
Theresa Minton-Eversole is an online editor/manager for SHRM.
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